GREECE’S new prime minister Alexis Tsipras said he would “implement in full” his pre-election pledges in his first major speech to parliament on Sunday. He would end austerity and reject the proposed extension of the international bailout, he insisted, repeating his pledges to raise the minimum wage, re-hire public sector workers that were fired illegally, give a bonus to low-income pensioners as well as give free food and electricity to the worst affected people.
The big question is how Tsipras will finance these pledges, considering he also plans to raise the tax threshold. New taxes and minor spending cuts he proposed would go nowhere near covering the state’s money needs. In fact, without the final instalment of €7.2 billion Greece is due as part of the bailout programme, which ends at the end of this month, the country would be unable to cover its financial requirement. Tsipras has proposed a bridging loan that would give Greece time to re-negotiate bailout terms with the EU, while reassuring eurozone partners that there were no plans of a default.
On the surface, this seems a sensible proposal, particularly as Greece’s €320 billion debt (174 per cent of GDP) is unserviceable under current conditions. However the signals from Europe, with regard to a bridging loan have been anything but encouraging. The head of the Eurogroup, Jeroen Dijsselbloem stressed that Greece had to apply for an extension of the bailout, because “we don’t do bridging loans.” Turning the screw, the European Central Banks announced that the struggling Greek banks would not be able to access emergency liquidity assistance using Greek government bonds as security.
Greece’s finance minister Yianis Varoufakis will not be in a very strong position to push his proposals at tomorrow’s specially-called meeting of eurozone finance ministers, as member-states like Spain and Portugal, which have also received assistance, are opposed to special treatment for Greece. Germany, the EU’s paymaster has also made it clear that Greece should honour its agreements with its lenders.
With so much at stake at Wednesday’s meeting, it was demoralising hearing our politicians, lowering such an important issue to their level, simplistically turning it into some test of the Anastasiades government, which they collectively urged to back Greece. As if to emphasise their commitment to theatrics they have also organised demonstrations in support of Greece, in Nicosia and Limassol, on Wednesday.
Greece’s future could be decided on Wednesday and the parties are cynically looking to score political points at the expense of the government. Nobody could believe they are so naive as to think the stand of Cyprus’ finance minister would influence, in the slightest, the decision that his colleagues from the eurozone’s powerful countries will take.